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Today we take you through the exact steps of buying your first home, including one common mistake Nathan made!
00:00 First Time Home Buyers Guide [Step By Step Process in 2024]
00:34 1. Consider Your Options
02:39 2. Research & Planning
05:23 3. The Property Search
07:17 4. Choosing & Comparing
08:06 5. Making An Offer
09:14 6. Getting Your Loan Approved
10:08 7. Waiting Before Settlement
11:30 8. Moving Into Your New Home
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Buying your first home is a big step and you may not have a clue on where to begin. You may not realise it, but your first property purchase actually starts 24 months before you sign the contract.
It may seem like a long time, but this timeline could improve your chances of finding your dream property with a competitive home loan. Although it is possible to purchase a property in a shorter time period, it will depend on the state of your finances and how keen you are to get a home loan that will save you the most money.
24 months before
Your repayment history: Although it may seem like a long time from buying your first home, this is a crucial time because from this moment onwards, your repayment history will start to affect your credit report. In March 2014, changes to the Australian credit reporting system will mean that lenders can see the past 24 months of your repayment history.
Create budget: According to a recent study by Bankwest, it takes the average Australian first home buyer 4.2 years to save a deposit of 20% or more. Saving for a large deposit cannot only help reduce the repayment amounts; you can also avoid paying extra costs such as Lenders Mortgage Insurance which is charged when you borrow more than 80% of the purchase price. The sooner you start saving for a deposit, the less stress it will put on your finances.Check your Credit report:
12 months before
Check your credit report: It is a good idea to check your credit report every 12 months to ensure that your finances are on track and there are no errors recorded.
Save for a deposit: Now is the time to buckle down
Review your debt: Credit cards, personal loans, HECS debt and other ongoing financial commitments could affect your borrowing power. So, although you need to save for a deposit, it is also important to reduce your debt as much as possible. If you have too many liabilities, you may not be approved for a home loan or the lender may apply certain provisions such as a higher interest rate. It is also important to note that when assessing your home loan application, a lender will use your credit card limit, not the amount you owe. So, even if you have $0 owing on the card, they will still include the limit. Therefore, if you have a credit card you do not use, it may be beneficial to cancel it.
6 months before
Research other professionals: There are several other professionals you may need to engage with during the property purchase process, some may include a lawyer/solicitor, pest and building inspector and a financial adviser and now is a good time to research and find the right one.
Organise paperwork: There are several paperwork requirements that lenders will ask for when you apply for a home loan, so to help move the process along quickly and smoothly, make sure you have the right information ready. This paperwork may include tax returns, bank statements, credit card statements, payment summary and payslips.
Start researching home loans: Before choosing a lender, you will need to look at your own needs and goals. Do you want to pay your loan off as fast as possible or do you prefer stability with consistent repayments? This will affect what type of loan is most suitable. Take the time to speak with different lenders and see who is the most knowledgeable and who you are most comfortable dealing with.
Research other prepurchases costs: Many first home buyers get caught out thinking the deposit is the only thing they need to save for. However, there are several other prepurchase costs that can add up to a significant amount of money. Some expenses include: stamp duty, legal fees, insurance, loan establishment fees and lenders mortgage insurance (if borrowing more than 80%).
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